R S Software (India) Ltd Management Discussions.

Operational Highlights FY2018-19

• What were the principal initiatives by the Company during FY2018-19

CEO stepped into the business development team to assist in opening enterprise accounts through social connections/networks and warm leads

COO brought onboard to build and drive the growth strategy for the organization

- Sales engineers stepped up to execute multiple roles-Technical Sales + Account Management + Sales Engineering

- Practice leaders stepped up/promoted for customer facing roles to strengthen the sales support process

- Delivery made accountable for completing the sales cycle

- HR team empowered to support an increasingly performance driven Corporate Culture

- Marketing consultants hired to reposition and rebuild brand RS

• What were the principal challenges faced at the start of FY2018-19

With CEO stepping in, it became imperative to change the composition of the sales team and the sales strategy

Changing customer segment priorities meant a fresh start in several situations.

Repositioning and Rebranding of RS Software in the US/International Market

• What are the three principal trends influencing the sales function

Market trends (greater adoption of digital payments, faster payments, security-3DS2.0, digitalization in Banks, newer payment platforms).The key market trends continue to be digital transformation of enterprise accounts across the enterprise. Strategy development and execution are positioned within the business unit feeding into the overall enterprise strategy. The largest challenges with this approach are the lack of mapping common processes across the enterprise to receive the maximum value from reuse and efficiency by leveraging data to provide an enhanced customer experience no matter if a consumer or a commercial account. This trend feeds into the need for an enhanced customer experience where the customer is provided offers, service and content that is relevant to their immediate need based on historical activity and real time interactions both with the provider as well as integrating social media and other external content and data. These two trends drive significant revenue, profitability and efficiency within the market segments RS is pursuing in the financial services payment segment.

Client expectations-offerings, domain knowledge, services-Client expectations have transformed for their key suppliers based on their customers needs and demands. Offerings need to be complete and employing easy to integrate APIs to aid time to market, integration and testing so investments being made see a return in the same fiscal year. Commodity providers still have a place in the market providing low cost services that dont differentiate but still provide cost arbitrage that clients have become accustomed to receiving. The shift is looking for specific companies who possess domain expertise that can address very specific business challenges where the client is seeking advice, a point of view and a market perspective outside of their own experience and views to either validate a strategy or create a new approach. Clients will buy this service to fill gaps in their own knowledge and experience in existing or new markets. Managed services will continue to grow as clients see the value of outsourcing portions of the business they cannot staff or run effectively internally.

Competition-offerings, focus areas-The main competition in the market are the existing offshore providers who have practices in financial services with sub-practices in banking and payments. Although these commodity providers have scale overall, they lack depth in the payments domain since there is little focus and a goal to pursue, capture and bill every opportunity at a client. As described above the client is looking for more specific focused expertise to assist them with payments challenges that are market and time sensitive as they are pressed to react in real time to FinTechs and their unrelenting release of new ideas that threaten to continue to take market share from the traditional payments providers.

• What are the strengths of your sales function?

Market coverage- RS is hiring enterprise sales directors to cover the top tier payment providers in banking, payment processing providers, ISOs/ISVs, payment gateways and the scheme networks. o Payments knowledge-All of the sales directors and support team come from a payments background that has direct relevance to the RS target market, vertical offerings and horizontal offerings.

Sales experience-All of the sales directors have a minimum of ten years experience in payments services, software and solutions. As described above, all have experience directly related to the RS offerings, we are taking to market.

Strengths of the sales function-We will have a team of five with sales support and domain expertise. We will also rely on support from the competency center in Kolkata for added business and technology support. o Brand recall-RS is an unknown brand to the broad market. Much of the initial work to be done is evangelical education about RS as a company, our expertise and focus on payments and the offerings we bring to the market.

Positioning of services-The sales team will focus on asset based and non-asset based offerings that leverage services from entry points like health checks, through implementation and customization of licensed assets to building bespoke applications fit for the purpose for clients at their request.

Clarity of size of customers to be addressed-Top tier payment providers in banking, payment processing providers, ISOs/ISVs, payment gateways and the scheme networks.

Clarity of geographies of presence-The sales team will focus on the markets in the United States and Canada, two of the largest payments markets in the world.

• How did the Company transform or strengthen in FY2018-19

What is the percentage of revenues derived from repeat business from existing clients

Won the NPCI Global RFP for building a first of its kind Enterprise Fraud and Risk Management solution for India, triumphing over heavyweights in the Proof of Concept and Reverse Auction phases.

Secured a 4-year service contract with Metabank to provide a Distributed Agile team, with an annualized run-rate of US$1.0M.

Brought two of the accounts on track through delivery persistence-GET, NTS, adapting with the changing customer expectations.

Created a new global market offering for 3DS2 though RS Test2PayTM . The software was successfully delivered to NTT Data (Japan).

Continued repeat business from the accounts Bill2Pay, Discover, NTS, GET, GovPay made possible by engaging customer relationship and excellent/ timely delivery.

Implemented a country level Fraud and Risk Management solution catering to cards and alternate payment channels with 282 Banks on-boarded as on 21June 2019. The implementation will uniquely place RS in the largely unexplored fraud and risk management space currently dominated by only a few players.

• Why are you optimistic about the sales function? What does the function expect to achieve in FY2019-20?

Strengths -Clearly defined sales strategy and world-class marketing team in place to execute services-products- platforms market direction, as we start the FY2019-20.

The sales team has defined goals for accounts, offerings, revenues and expansion. The team will focus solely on the targets identified and will move any non-core accounts to the staff augmentation group or a group not focused on enterprise level accounts.

The COO has restructured and aligned his leadership team and is ready to execute the accelerated growth.


RS Software has always been quick to respond to the business dynamics that keep changing. The finance team continues to foster a culture of cost optimization and compliance orientation to enhance transparency and maintain a stronger Balance Sheet.


To continue making significant investments during the transition phase of the strategy while managing investor expectations

To manage the cash flows that can effectively cope with investments aligned to the transition strategy


Maximize value for all stakeholders

Foster a culture of financial discipline to emerge as partner-of-first-choice for all stakeholders

Key measures undertaken in FY2018-19

Enhancement of performance culture to boost operations

Implementation of a sound budgetary control system improving cost and financial management

Effective implementation of GST and Ind- AS regulations

Initiatives in FY2018-19

Strengthening of internal financial controls and aligning them with best-in-class standards

O Bringing in transparency to improve confidence of stakeholders

Priorities for FY2019-20

Target optimal utilisation of resources and infrastructure to meet long-term goals

Generate higher revenues from products and platforms

Ensure better cost and resource management


The Company continues to draw support from the inherent strength of its Balance Sheet

It has improved upon its receivables collection cycle thus giving impetus to working capital management

The de-risking of client concentration has helped the Company expand its area of operations thus leading to a wider future market

Growing the intellectual capital

As a corporate focused on the payments industry for over two decades, RS Software has made a name for itself across the payments value chain. Keeping immediate and long-term business objectives in mind, the Company has focused on building expertise, products and solutions across the value chain of the payments ecosystem.

Over the years, RS Software has strengthened its domain knowledge through the pillars of the RS School of Payments, Knowledge Management Systems and the RS Payments Lab. Driven by an entrepreneurial mindset and willingness to embrace challenges, our competitiveness is driven by a rich and diverse pool of talent that is engaged in continuous learning.

RS School of Payments

The RS School of Payments is a powerhouse of domain knowledge that has been acquired by playing a key role in the evolution of the payments industry. It maximizes productivity and minimizes learning curves on the back of a best-in-class Knowledge Management System that focuses on business functions, technologies and customized strategies. The RS School of Payments conducts courses covering the entire payment spectrum-from basic to advanced levels in niche areas. These advanced courses are crafted by industry and subject matter experts, and are attended by our employees as well as our clients. The RS School of Payments is also involved in knowledge capture and dissemination across projects. It facilitates cross project knowledge sharing to enhance organizational knowledge capability.

One of the top thought leaders of the global payments industry, the RS School of Payments is highly respected by its peers.

RS Payments Lab

The RS Payments Lab plays a critical role in exploring proofs-of-concept and developing reference architectures in new technologies (mobile, analytics, test automation and tokenisation) well before the customer begins to use them. This empowers RS Software to propose solutions to customers that enhance productivity, reduce costs and reinforce quality, strengthening the customers profitability and ensuring satisfaction.

The Company has built an encompassing repository of sectoral knowledge comprising customer interactions, market research, expert opinions, research reports and webinars that are white-labeled and curated in a knowledge center supported by a search facility. The Company will continue developing its expertise while focusing on core processing areas like advanced payments and security, data management and analytics, and automation.

New initiative FY2018-19 RS Payments Universe

The RS Payments Universe portal from the RS School of Payments has been conceived as a branding, knowledge management and collaboration platform for all payments enthusiasts be they RS employees, alumni, payments SMEs, customers, prospects or the general community as a whole. In addition to providing up-to-date information and trends on the payments domain, technology, regulation and related subjects through news alerts, videos, podcasts, blogs and a wiki, this unique portal aims to combine the features of popular social media platforms LinkedIn and Twitter by enabling both blogging as well as instant messaging, complete with hashtags for easy searching. The content for the portal would come from RSites as well as from external SMEs we are connected with, and would be enriched with news feeds and articles purchased from reputed sources.

We also look forward to the participation of academia, advisors, and online/social media specialists to keep the site interactive and the content current at all times.

The portal promises to be a powerful branding tool that positions RS as a leading expert and consultant in the Payments world.

RS Software has engaged a world class team of marketing specialists to embark on a journey of understanding ourselves better, to evolve a clear, distinct and impactful brand language and have in place a new identity. We believe that timely marketing intervention will unlock significant value for all stakeholders.

Outlook for FY2019-20

Establish the Company in a unique and dominant position in this dynamic, high speed, and innovative payments revolution.

Build itself as a brand that shows its full commitment and passion towards every aspect of this payment revolution, from products to platforms and beyond.

Have a new identity in the form of a new logo and visual expression O Define all aspects of our core philosophy as a brand, including our Core Value Proposition, our Core Pillars, and our Statement of Purpose that drives our behavior

Establish how we view ourselves as a team of passionate individuals with a hunger for creating value for all stakeholders The Company has been investing in rebuilding its sales engine for the past 3 years and during FY2018-19 it has reviewed all its learnings of how we are succeeding in our customer facing strategy execution. As a result, sales process leadership has been totally revamped during the last quarter of FY2018-19 and we now have a plan that calls for total revitalization of our revenue acceleration.

Sales & Marketing

Criticality of a strong HR team for RS Software

RS Software is in the process of strengthening its business where it is refining its business strategy by focusing on delivering value-based Payment solutions for clients through our assets, platforms and expert knowledge in the Payments domain.

This has necessitated the need for change in how HR functions in RS, starting from Talent Acquisition and Talent Management, to building a performance driven Corporate Culture. In order to lead this initiative, a strong HR team which has the knowledge and understanding of business and people in such changing times is extremely critical for the success of the organizations goals.

HR Strategy

• A well-structured and strong HR team, with well-defined HR processes 0 Strong understanding of the organization and the Payments business

• HR strategy aligned to the organizational goals

• Hiring strategy directly derived from workforce plan with clearly defined skill-sets and timelines for fulfillment

• Training programs covering the entire payment spectrum from basic to specialized courses through the RS School of Payments to maximize productivity and learning rates

• Internship programs for fresh college graduates and grooming them so that the best talent can be inducted into the RS workforce


Major Challenges in FY2018-19:

• Retention of key talents who will play pivotal roles in implementing the Companys vision

• Skill realignment as per new business scenario

Steps taken to address these challenges:

• Defined career path for critical resources as per their aspirations, skills and competencies

• Open discussions with the Companys Leadership Team to address resource concerns

• Identified probable future clients and relevant skills required for fulfillment

• Training of available resources to ensure availability and deployment of quality talent as per business requirements

• Personpower rationalization to align skills of resources with the organizations needs

Gender mix

Gender mix (FY2018-19)

Male : Female-3.7 : 1 Gender mix (FY2013-14)

Male : Female-3.3 : 1

Outlook for FY2019-20

For the Company to achieve its organizational goals for the current fiscal, RS Software has plans to transform itself from an effort driven organization to an achievement oriented organization. This requires a cultural shift in the organization which is possible only through a well-executed change management initiative and warm/positive employee connect.

The Company understands that HR will play an important role to lead this initiative and build a productive and future ready organization. HR is expected to not only support the business but also add value to the way the Company does its business through proactive talent management and maximizing resource utilization.


M The mission of Q&B process is to ensure that customer satisfaction is maintained at high levels by delivering high quality work, and benchmarking our processes to global levels.

• PA-DSS Assessment carried out for RS iFinSwitch™ and RS MerchantEdge™

• SSAE18 certification done for RS Software

• Project initiation support 0 Identifying and mitigating risks

• Defining project governance and delivery plans

• Developing a thorough understanding of project dynamics by detecting points of failure and generating alarms Conducting periodic reviews of software delivery process Conducting weekly reviews of project reported metrics and customer status reports

• Reviewing products prior to delivery

• Conducting defect and root cause analyses

• Executing process improvement exercises

• Gauging customer satisfaction through independent surveys

• Enhancing the level of organizational automation

• Conducting metrical analysis and undertaking corrective and preventive actions

• Organising training sessions, workshops, planned and unplanned audits, quality weeks and other academic and non-academic seminars

• Carrying out routine audits of quality systems by third-parties

• Acquiring payment application data

• Security Standard certification for payment platforms

The Companys

Overview SsSTi

RS Software has successfully evolved and maintained its business leadership over two decades in the area of electronic payments. From its inception we built a company that has a clear vision at each stage of its corporate journey, and a strategy and business plan to achieve the vision. We have had to navigate three major downturns in the market opportunities available to us, the most difficult being in year 2001 when the dot com bubble burst happened and the most impacting terrorist impact in America that brought a major shock to world-wide economies. The Company had significant debt and not enough revenue to even service the debt. But we were determined to come back and this is where our corporate values helped us to continue marching with our heads held high. "When the going gets tough, the tough get going". The greatest learning happens during adversity and those learnings strengthened our foundation hugely. Today we are in our third phase and we are a zero debt company. Our challenge today is the transitioning of our strategy. Services to products to platforms, and eliminating the most critical risk about dominant dependence on a single client. We have achieved the latter and are transforming the Company to achieve its strategic transition.

The Company possesses a strong solutions-oriented approach and a robust financial base (marked by zero debt). RS Software integrates knowledge management, innovation and specialized methodologies with focus on payments technologies to deliver the best-in-class services to a client list that includes the worlds leading payments brands, and now launching payments platforms, and payments focused digital assets. It has built solutions for the introduction of mobile and contactless payments while mitigating the pain and cost associated with the legacy systems supporting them.

It has been involved in setting up the technology for unique payment platforms like Unified Payments Interface and Bharat .

Bill Payment Solutions, an integration online platform for all bill payments in India.

Our proprietary methodology is based on the unique dynamics of the payments industry. We deliver a full range of services to our clients through our Global Execution Model which includes:

RS School of Payments that maximizes productivity and minimizes learning curves; RS Payments Lab that focuses on innovation; RS Accelerators/Assets providing sustained engineering and RS Knowledge Management resulting in knowledge incubation.

Our key achievements

Transformative digital infrastructure-UPI that is transforming India Building scalable integrated billing platforms for India that reaches out to billion+ people Focus on Fraud & risk management, supported by strong authentication strategic competencies

Financial institutions, network providers, processors and software companies providing products and services to the payments industry need a partner who understands the complexities of that environment. Over its 25 years of building payments for the electronic payments domain, RS Software has kept its focus on availability, scalability and security while providing solutions in environments that support processing of billions of transactions annually.


To build things that customers want, a business needs to out-innovate its competitors—not just uncovering unmet customer needs to find profitable white spaces but also using technology to enter new markets or go to market in new ways. New sources of growth come from redesigning business models, creating something new, and exploring disruptive services. New business models dont have to be complex; they could involve tapping into new sales channels to reach different customers, for instance, or introducing new services to support an existing product.

Strategy of RS Software

Our transitioned strategy calls for us to Invest, Perform, and Create. Investing in growth is what we started in April 2016 with the goal to get us effectively into the right opportunities. During the last three years we have utilized our strategic investments of ~ र100 crores

• The RS School of Payments has helped to build new technology capabilities by utilising our knowledge repositories built over the past 25 years, leveraged the silicon valley presence of the Company to acquire and learn the emerging digital technologies, and accelerated the reach to multiple industry SMEs to constantly add to the knowledge pool. We have tested all of our learning and demonstrated success with new clients, large and small businesses and importantly at a national level, while building Indias digital payment infrastructure.

• The RS Payments and Innovation Lab has innovated and built several products and frameworks for enhancing the acceptance infrastructure in digital payments economy. As the regulators globally are pushing down the interchange, the cost for merchants for accepting digital payments is going south, and the wealth is moving from the banks to merchants, so the opportunity is to enable merchants to spend some of that additional wealth on the value adds that payment aggregators can provide to them. Processing engine is like the operating system, but by building business applications on top of that and that is where the opportunity is.

• Evolving new business models: Products produce a single revenue stream, while platforms—which we define as intermediaries that connect two or more distinct groups of users ^ and enable their direct interaction—can generate jro many. Recognizing that 75% to 80% of the world, especially in emerging economies still pays in cash at merchant locations, there is need in the market for high quality acceptance infrastructure.

The Company has built a world-class digital merchant acquiring platform to address this opportunity Performing optimally in commercial functions is always work in progress, but by enhancing our leadership bandwidth that began in January 2019, our focus on transformation to achieve high performance is significantly high.

We are creating new offerings and business models that are custom-designed to satisfy unmet needs more completely, quickly, and flexibly than before. This is now enabling to build a pipeline that fuels growth far into the future. i

Strategy Summary

As the secular growth trend in digital payments continues to strengthen itself, the economic MOAT of the Company reinforces itself and continues to advance and leverage our unique payments domain expertise and demonstrate how it delivers the highest value and lowest risk to clients Choosing the right path to growth.

The plan now focuses on how our economic MOAT is enabling us to participate in each of the emerging opportunities

Market Trends and how RS Software is equipped to meet each of these opportunities. This is where RS Software has made an investment of H100 Crore+ during the last 3 years, and re-architected its capabilities to be a leader in providing technology solutions and platforms as digital payments grow globally. This is the new three-prong business model, services-products- platforms.

Key opportunities in the market

1 Mobile used for payment initiation and acceptance Need better FRM systems Y Y
E2E security
API based end point access
2 Digital Payments on rise demands platform upgrade for processors, needs support for API, ISO20022, PSD2, ... Platform upgrade in banks and processors Y Y
Permissioned access to personal information for authentication (OAuth)
Richer information in message to help straight through processing)
3 Adoption of 3DS2, for risk based authentication(RBA) and SRC (secured remote commerce) for interoperability EMVCo certified test platform provider for 3DS2 Y Y
Same platform upgraded to service SRC and other EMVCo specification verification
4 In-country Payments (enforced by federal data locality) Building in-country payment systems (like UPI) Y Y Y
Building single platform deployed locally to serve both Cards and Bank Account sourced payments
5 Faster Payments Building faster payment systems (like UPI) Y Y Y
Integrating banks to faster payment rails
6 Bank transformation Platform upgrade, security upgrade, API based access with one of the two strategies Y Y Y
Want to compete with PSPs, or
Want to offer their services to PSPs
Ready to offer innovative settlements for quick availability of good funds to merchants and goods/service providers
7 Network transformation Network leverage their ubiquitous presence and follow strategies like: Y Y Y
Offer the infrastructure for others to reuse
Offer competing products (faster payments)
8 Competency Development Following are the areas where organizational competencies needs to be built Y Y
8a Cloud Hosted services Preferred deployment are cloud
8b Distributed Ledger Technology (DLT) Option for faster settlement in trusted circle Y Y Y
8c Data Analytics Transforming most of the business by leveraging AI/ML for prediction, classification, outlier detection, ...
8d Voice Based Commerce (Alexa) UX transformation to impact all commerce interaction in 2-3 years Y Y

Service: Mobiles used for payment initiation and acceptance

In developing nations QR Code and Dynamic QR Code is helping adoption of electronic payments at brick-and-mortar stores by drastically reducing the cost of acceptance endpoint. It is frictionless and fast. A middleware is needed to orchestrate the multi-leg messages between network, banks/processor and consumer/merchant. It challenges security.

With the increase in the transaction landscape, integrity becomes important to safeguard the market and public trust. But, the only thing that might impede that effort, exposing the organization to serious risk or damage is fraud and misconduct. Hence, the risk management needs boosting by having Fraud Risk Management (FRM) enabled at the edges.

Customers needing this service

Any bank/FI who wants to compete or cooperate with FinTechs for payment service leveraging mobile as the enabling device

RS Softwares offerings:

• Understanding of the challenges for a middleware that connects Core Banking Solutions (CBS) to faster payment rails and extends the APIs for mobile based payment initiation and acceptance

-Telescopic time-out does not work, hence the system needs work around; each option has its pros and cons. This is the key knowledge.

-Lost messages are typically reconciled end- of-day, however, a hold on account for large amount needs to be released much earlier. ? The risk management at the edge is a small subset of the technology RS is building for EFRM.

Service: Digital payments on rise demands platform upgrade for processors

To participate in the ecosystem of digital commerce system, the need is very high for PSP/Banks/FIs to offer Digital Payments by providing APIs and to support message specifications that help interoperability.

Customers needing this service

Any PSP, Bank, FI who want to participate in the vibrant digital commerce ecosystem and is ready to open up the services through APIs

RS Softwares offerings:

• With UPI, RS has successfully built the digital enablement layer for large payment infrastructure.

• RS was involved in drawing the roadmap of platform upgrade to support APIs for a large

US processor

• RS is aware of using rich invoice related payment message to conduct straight- through-processing which makes payment fast and secure.

Service: Adoption of 3DSecure 2 (3DS2) and Secure Remote Commerce (SRC)

Various security measures such as the Address Verification System (AVS) or the CVC verification used in some markets couldnt ensure credit and debit card payments the highest level of security fully. To address this problem, card networks implemented the first version of 3D Secure in 2001.

3D Secure 2 builds in an extra layer of fraud protection and ensures that the businesses only accept card payments from legitimate customers. In addition, authenticating a payment with 3D Secure changes the liability for chargebacks due to fraud from business to the customers bank.

Networks like Visa and MasterCard are ready for 3DS2 from April 2019. MasterCard has rolled out globally from 1 April, 2019. Visa has rolled out in Europe from April 2019 and will be rolling out in North America and Latin America from September 2019, and subsequently from April 2020 in rest of the geographies. This will put pressure on merchants and issuers to comply.

Customers needing this service

All issuers and merchants/acquirer who have not been certified for 3DS2

RS Softwares offerings:

• RS has a Test2Pay (3DS2) solution which is running in NTT, Japan to certify the issuer banks on their ACS implementation. A recent demo to Europay, Mastercard, Visa (EMV) company has their representatives take interest on this RS digital asset.

• Deploying a multi-tenant 3DS2 Test Platform that is certified by EMVCo has a direct impact to RS brand and revenue.

• This is an investment which is being done and has prospects in MasterCard as of now.

• The same platform can be extended to test and certify other EMVCo specification like SRC, which again is gaining traction in the market.

Service: In-country Payments

Good prospects are witnessed in small developing nations like Maldives, Bhutan, Indonesia, and others. These countries would like to build an interbank switching mechanism, a digital enablement layer to extend the money transfer, but would like to reuse and ride over the existing settlement mechanism. In developed countries the effort generally to encompass faster or even near real-time settlement. Another observation is that the in-country payment solution desires a way to have both the international card payments and in-country payments covered in this effort. It is witnessed in Nepal and Maldives as well. Typical way of engagement is to work via a local partner and in the recent opportunities we have partners both in Indonesia and Maldives to execute the deal.

Customers needing this service

All the developing nations who want to build an in-country payment infrastructure pretty much similar to UPI

RS Softwares offerings:

• RS has implemented similar use case in UPI plus it has deep knowledge in international card based payments as well

• RS can help the country implement from consulting to roll-out

• Having closely tackled UPI 1.0 and 2.0, having solved the problem of settlement window adherence very recently, RS has the business and technical domain to tackle the challenges. As resource is not a constraint for developed nation, the challenges RS has solved is closer for developing nation use- cases

Service: Faster Payments

To increase efficiency in payments, countries and large corporations are implementing faster payments which help to reduce cash, increase traceability and to reduce currency fraud. By virtue of building UPI, we are now naturally positioned to offer faster payments as a solution that too using open source and using commodity hardware. Having said that, the opportunity for building such infrastructure would be for developing countries where the focus is digital payments rather than faster payments. But as developed nation builds their faster payment rails, there is a need for banks and FIs to use a middleware to interface with the faster payment rails on one end and have it interface with the Core Banking Solutions (CBS) and finally expose APIs which are available for access from the mobile service infrastructure.

Customers needing this service

All banks and FIs who want to integrate into the faster payment rails

RS Softwares offerings:

• RS Software has proven track record. The Company has built such middleware and integrated banks CBS, UPI and exposed APIs which are used by mobile service infrastructure.

• Digital asset available to reduce build time yet make it customisable to integrate with all 3 interfaces

• Availability of such COTS is not there as the combination of 3 interfaces are very large in number

• Investment is planned in FY2019-20 to build a Faster Payment digital asset leveraging our UPI experience to showcase the knowledge for upcoming opportunities

Service: Bank Transformation

Banks are the actual custodian of funds and the customer relationship for ages.

Their services are being challenged by the FinTechs. Banks are adopting one of the two strategies-(a) compete with FinTech, (b) partner with FinTech. For option (a) banks need to transform their service access in such a way that digital enablement layer, digital consent layer, user access verification layer, consumer verification service layer, data analysis enablement layer, and more can be provisioned. This is a large investment and usually big banks are executing the strategy. On the other hand, small banks are buying products that help them to be in the market quickly albeit with reduced feature compared to big banks. Some of the small/ medium banks have chosen to commoditise themselves and they are partnering with FinTechs to be present in the ecosystem; they are gaining the business but not the brand and this is their conscious choice.

Customers needing this service

All banks who are on their digital banking journey and would like to work with a partner who understands payments, high performance service (security, reliability, availability, throughput, at global scale)

RS Softwares offerings:

• We do not have an exact fit, however, working with CBS for integration of UPI has given us the knowledge on this particular aspect of creating a digital enablement layer for use with mobile and other API-first solutions

• We are engaged with MetaBank project which is providing us the opportunity to understand what changes are happening in banks as they adopt transformation. The learnings can be leveraged for organizational competency development.

Service: Network Transformation

As in-country payment solutions mature that essentially rides on account-to-account (A2A) model, card payment networks need to innovate and protect their market. In past they have been focusing on increasing convenience which started from commercial cards, business cards, card-to-card payment, tokenization to enable *.pays to flourish both using Secured Element (SE) or Hosted Card Emulation (HCE) and now move to Apples Card which is in the iPhone; however the threat of being intermediated remains. Pressure on keeping the data-within- sovereign-perimeter is a second challenge, first being staying relevant. Both of these issues could be handled by providing something like network-in-a-box which can interface with international schemes (Visa, MasterCard, Discover, Amex, ...) and this line is being actively explored by the networks. To move the payment system to a box it is not only the authorization that needs to be moved to a new age technology stack driven platform, but the other payment components like Clearing and Settlement, Fraud Management, Chargeback, Reversal, Dispute Management, etc. also needs to be suitably upgraded.

Customers needing this service

This would typically be one or two of the payment networks that operate across geographies with diverse jurisdiction. The engagement would be services where RS is a part of the team.

RS Softwares offerings

• Deep domain knowledge of faster payment/digital payment like UPI and 25+ years of working with the payment network leader

• Knowledge of working with all components of payments system (soup to nuts)

The Companys financial highlights, FY 2018-19

The consolidated Profit and Loss account for the year ended 31 March, 2019 was as follows:

Particulars As at 31 March, 2019 As at 31 March, 2018
Revenue from Operation 6539.27 6342.92
Other Income 644.14 855.04
Total Income 7183.41 7197.96
Profit before Finance charges, Tax, Depreciation/Amortization (PBITDA) (2997.04) (3597.47)
Less : Finance Charges 28.32 3.75
Profit before Depreciation/Amortization (PBTDA) (3025.36) (3601.22)
Less : Depreciation 330.15 224.15
Profit before Taxation (PBT) (3355.51) (3,825.37)
Provision for taxation (639.10) (1,181.70)
Profit/(Loss) after Taxation (PAT) (2720.48) (2656.47)

Risk and Response

Regulatory risk: The changes brought about by the regulatory bodies might affect the business of the Company. Response: RS software has continuously adopted and adapted to the 1 changes whenever possible.
Technology risk: The technologies used should be tested properly otherwise the Company may have to face liability lawsuits. Response: The Company ensures that the technologies that are used are the latest, fail-proof and efficient.
- Human capital risk: Attrition of human capital could impact long term sustainability.
Response: RS Software takes adequate measures to train, motivate and upgrade skills of its employees. The Company has also created a knowledge management system as an information repository that can be referred to by others.
Growing competition: The increased competition from the existing players as well as new 1 startups might affect the Company. Response: RS Software has maintained a singular focus only on the electronic payments domain and the partnership with the National Payments Corporation of India has vindicated it. The Company has worked on intensifying its learning abilities by allocating substantial investments in the RS School of Payments and RS Payments Lab, both of which gives an edge over the others

Internal control systems and their adequacy

The Companys internal audit system has been continuously * monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly.

_ The Audit Committee reviews reports presented by the internal auditors on a routine basis and -m takes corrective actions if and when ^ necessary. It maintains a constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively.

Human resources

The Company employed 309 individuals as on 31 March, 2019. Increase in the value of human capital through the development of individual and collective skills and I knowledge remained essential for continuous growth. The Company implemented programs for skill development. Programs for sharing and internalizing knowledge were conducted. Further, employees were sent to suitable outside programs to enhance awareness of the latest technology and domain developments. The Company emphasized the building of a motivated workforce.

Cautionary statement

The statement made in this section describes the Companys objectives, projections, expectations and estimations which may be called forward looking statements within the applicable Securities Laws and Regulations. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company.

Actual results could differ materially from those expressed or implied in the statements due to the influence of external factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on account of any subsequent development, information or events.